Thursday, September 23, 2010

Ontario Employment Law: Notice Periods for Non-Managerial Employees

Ontario employers are required to provide reasonable notice when terminating employment without cause. The duration of the notice period required is based on a number of factors, such as length of employment, seniority, the employee's age, likelihood of re-employment and character of employment.

In this article, we will consider the notice entitlements of non-managerial employees in non-unionized workplaces, based on the factors relevant to the assessment of reasonable notice, as articulated in the oft-cited case of Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.).

In Wallace v. United Grain Growers Ltd. 1997 3 S.C.R. 701, the Supreme Court of Canada awarded 24 months salary in lieu of notice to a company’s top salesman, noting that such an award could be said to fall at the “high end of the scale.” In coming to this decision the Court applied the well-known Bardal factors:

Applying these factors in the instant case, I concur with the trial judge’s finding that in light of the appellant's advanced age, his 14-year tenure as the company's top salesman and his limited prospects for re-employment, a lengthy period of notice is warranted. I note, however, that Bardal, supra, does not state, nor has it been interpreted to imply, that the factors it enumerated were exhaustive: see e.g.Gillespie v. Bulkley Valley Forest Industries Ltd., [1975] 1 W.W.R. 607 (B.C.C.A.); Corbin v. Standard Life Assurance Co. (1995), 15 C.C.E.L. (2d) 71 (N.B.C.A.); Bishop v. Carleton Co-operative Ltd. (1996), 21 C.C.E.L. (2d) 1 (N.B.C.A.). Canadian courts have added several additional factors to the Bardal list. The application of these factors to the assessment of a dismissed employee’s notice period will depend upon the particular circumstances of the case.

In addition, the court considered inducement - a factor not addressed in Bardal.

In Wallace, the employee had been induced by the employer to leave previous secure employment:

In my opinion, such inducements are properly included among the considerations which tend to lengthen the amount of notice required. I concur with the comments of Christie et al., supra, and recognize that there is a need to safeguard the employee’s reliance and expectation interests in inducement situations. I note, however, that not all inducements will carry equal weight when determining the appropriate period of notice. The significance of the inducement in question will vary with the circumstances of the particular case and its effect, if any, on the notice period is a matter best left to the discretion of the trial judge.

In the instant case, the trial judge found that UGG went to great lengths to relieve Wallace's fears about jeopardizing his existing secure employment and to entice him into joining their company.

Of course, the Wallace case is best known for its articulation of principles relating to bad faith termination; these principles were ultimately revisited and revised by the Supreme Court in 2008's seminal ruling in Honda v. Keays [2008] 2 S.C.R. 362.

In Cronk v. Canadian General Insurance Co., 1995 CanLii 814 (ON C.A.), the Ontario Court of Appeal overturned the trial judge’s decision to award a clerk sternographer (who was 55 years of age and had 28 years of service) 20 months of notice on the basis that the clerical character of the employment of the plaintiff did not entitle her to as lengthy a period of notice:

In my opinion, the character of the employment of the respondent does not entitle her to a lengthy period of notice. As pointed out by Saunders J. in Bohemier v. Storwal International Inc., supra, at p. 269:

It seems to me that the character of the employment of the plaintiff with Storwal does not entitle him to a lengthy period of notice on the basis of decided cases and the reasons I have stated. If the issue had been addressed at the time he was first employed, it would not have been reasonable for his employer to have agreed to a notice period sufficient to enable him to find work in difficult economic times. In saying this, I hope that it is not thought that I am unsympathetic to the plight of the plaintiff. His claim, however, is based on contract and it is not reasonable to expect that his employer would or could have agreed to assure that his notice of termination would be sufficient to guarantee that he would obtain alternative employment within the notice period.

In the end, the majority of the Court opted to give Ms. Cronk twelve months' pay in lieu of notice.

In Minnott v. O’Shanter 1999 Can Lii 3686 (ON C.A.), 42 O.R. (3d) 321, a case decided after Cronk, the Ontario Court of Appeal rejected “the rule of thumb” approach to calculating notice periods, where an employee is essentially given 1 month of notice for each year worked, emphasizing the need to use a contextual approach that considers the Bardal factors and other such factors.

In this case, an employee who had worked in the employer’s maintenance department for 11 years received 13 months of notice. In so deciding, the Court stated the following with respect to the Cronk case:

I do not agree, however, that this court’s decision in Cronk establishes an upper limit of 12 months notice for a manual worker such as Minott. And I do not agree that an award of damages equivalent to 13 months notice is unreasonable. Although perhaps at the very high end, 13 months notice for Minott is within an acceptable range.

Minott and Cronk exemplify the range of Ontario courts' approaches to the notice entitlements of non-managerial employees.

In Bramble v. Media Health and Pharmaceutical Services Inc. (1999) 214 N.B.R. (2d) 111, a decision that has garnered considerable attention from courts across Canada including the Supreme Court of Canada, the New Brunswick Court of Appeal departed from prevailing judicial thought, especially in Ontario, in disregarding the Bardal factor dealing with Character of Employment as an established factor in the assessment of the employee’s notice period:

It is now widely accepted that employment is an essential component of a person's self-worth. See Reference Re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313, at p. 368, Machtinger v. HOJ Industries Ltd., supra, and Wallace v. United Grain Growers Ltd., supra, at para. 93. By treating junior employees unfavourably solely on the basis of the status of their employment, the traditional approach undermines, without any justification, their self-worth. As a result, courts have been justifiably uncomfortable with a continued adherence to the traditional view. This discomfort may go a long way in explaining why courts, despite the lip service paid to character of employment as a factor, have tended, of late, to award notice periods to junior employees that approximate those historically reserved for senior employees.

In taking this position, the Court was moved by Statistics Canada research, especially unemployment figures, indicating that lower level employees have a more difficult time finding work than high level employees.

Ultimately, the calculation of reasonable notice upon termination of employment is dependant on the specific circumstances of each case. If your employment is terminated, legal advice should be obtained as to your specific entitlements.

- Robert Tanha, Toronto
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